A combination of hawkish action by the Bank of Canada and a return to risky sentiment with attendant rise in crude oil prices, helped the Canadian Dollar rebound firmly against the greenback. Consequently, the USDCAD is now trading at 1.31652 as at the time of writing.
Earlier in the afternoon session, the Bank of Canada had left its benchmark interest rate unchanged at 0.25%, and also left the size of its QE program unchanged. The BoC noted the evolving economic outlook at home and abroad, and also indicated that economic activity in Canada was recovering in a manner that was firmer than expected. The BoC rounded off its statement by saying it would “provide further monetary stimulus as needed.”
Crude oil prices also staged a comeback as risky sentiment returned to the markets. WTI crude gained 3.5% on the day and was trading at $38, serving to provide a further boost to the commodity-linked loonie.
Technical Outlook for USDCAD
Yesterday’s breakout move above the ascending channel and subsequent push above the 1.31501 and 1.32044 resistance levels, needed confirmation from a second successive penetration close above the channel’s return line. Today’s candle appears to have found support at the junction of the channel’s return line and the 1.31501 price level. A bounce at this area transforms the 1.31501 price level from a resistance to a new support, along with the channel’s return line. This bounce would refocus on the 1.32044 resistance, and a successful push above this level may then have a clear path towards 1.33487 and possibly 1.34656.
On the flip side, if the price successfully re-enters the channel, then immediate targets could be seen at 1.30385m with 1.29953 and 1.29241 remaining potential targets as well.
USDCAD Daily Chart